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Important metals will be a key battleground in US-China trade war: Andy Home

It's clear that vital minerals will be China's weapon of option in its escalating trade war with the United States.

Whenever Washington enforces brand-new restrictions on exports of advanced semiconductor chips to China, Beijing reacts by tightening controls on exports of the crucial inputs for chip manufacturers.

A third clamp-down on China's semiconductor industry has drawn a swift response in the form of a full restriction on exports of Chinese gallium and germanium to the United States.

Exports of antimony, used in photovoltaic glass, are now also banned in what appears like a riposte to U.S. tariffs on Chinese solar panels.

This is a carefully calibrated escalation, China using its supremacy of crucial metals to land like-for-like retaliatory blows for U.S. attacks on its high-technology abilities.

However, the guidelines of engagement are set to alter with the inbound Donald Trump administration threatening blanket tariffs on all Chinese goods.

The huge question is how well the United States can hold up against China's prospective metal action.

MARKET DISTURBANCE

The United States was 100% reliant on imports of gallium last year with China accounting for 21% of metal imports, according to the United States Geological Study (USGS).

U.S. import dependence was 82% for antimony and over 50% for germanium, with Chinese products representing 63% and 26%. respectively of total imports.

Flows of Chinese gallium and germanium to the U.S. have. dried up this year after Beijing tightened up export controls in. August 2023.

This month's restriction is simply main verification that China's. Ministry of Commerce (MOFCOM) had currently stopped approving. exports to the U.S.

. The supply chains of all three metals have actually been massively. disrupted with purchasers rushing to find non-Chinese supply.

The price of antimony has actually rocketed from $13,000 per metric. ton at the start of the year to $38,000 after China announced. brand-new export constraints. The germanium cost has leapt from. $ 1,650 to $2,862 over the exact same period.

RACE TO DEVELOP

The Biden administration has actually put billions of dollars into. reconstructing domestic crucial minerals production capability but. progress can be sluggish, especially when it comes to allowing. brand-new mines.

The Pentagon is backing Perpetua Resources' plans. to resume the Stibnite antimony mine in Idaho however initially. production is just expected in 2028.

The country's only processor, United States Antimony. , is preparing to increase production in reaction to the. existing price boom however requires to secure enough non-Chinese. third-party feed to do so.

The U.S. hasn't produced any main gallium given that 1987.

Rio Tinto thinks it may be able to produce the metal. at its Saguenay-- Lac-Saint-Jean alumina refinery in Canada. It. plans to build a presentation plant with backing from the. Quebec government.

Rio has a successful track record of finding critical. minerals in its smelter waste-streams. It already produces. scandium at its titanium operations in Canada and tellurium at. its copper smelter in Utah.

Nevertheless, Rio's gallium contribution to the U.S. commercial. base will be at least partially based on whether Trump makes. excellent on his risk to impose tariffs on his Canadian neighbour.

DUAL-USE LIST

The big problem facing the U.S. is the degree of China's. supply-chain dominance in the important minerals area.

China is the largest source of supply for 26 of the 50. minerals currently classified as important by the USGS, according. to the Center for Strategic and International Researches. think-tank.

A number of them are on the very same MOFCOM military-civilian. dual-use export control list as gallium, germanium and antimony.

China has several channels of attack in the event of. further sanctions on its modern markets.

Tighter constraints on exports of graphite, announced at. the same time as the U.S. export ban, are an ominous indication the. tit-for-tat is spilling into the battery metals area.

Although graphite does not gather the very same headings as other. battery metals such as lithium and cobalt, it is an important. battery input in the kind of the anode.

That makes it an obvious option for retaliation against U.S. duties on Chinese electric lorries.

Tungsten, also on the list, is another metal in the. spotlight after the U.S. revealed strategies to enforce 25% tariffs. on some Chinese items from the start of 2025.

DECOUPLING

Tungsten shows how the metal decoupling is working both. ways.

The more China bends its crucial mineral muscles, the more. the U.S. uses tariffs to produce a price incentive for domestic. producers.

Import responsibilities on Chinese aluminium and steel have actually been hiked. to 25% this year. Tariffs on Chinese imports of natural graphite. will increase to a comparable level in 2026.

That is, if China does not get there first by prohibiting exports. to the U.S. before then, simply as it has finished with gallium,. germanium and antimony.

The U.S. is strolling a great line between utilizing tariffs to. reduce import reliance on China and not being struck with a full. retaliatory trade restriction before it can develop its own replacement. capability.

This is a multi-faceted job given each critical metal has. its own special supply profile.

The typical theme, nevertheless, is China's control of international. supply and it's just a concern of which component of the. periodic table is next to be tossed into the escalating trade. war.

The opinions expressed here are those of the author, a. columnist .

(source: Reuters)